Family farms making “Illogical” decisions in pursuit of growth

Family farm businesses should consider increasing revenues through anaerobic digestion (AD) before making often “illogical” decisions to take on more land, it has been claimed.

EnviTec Biogas UK says many family farms cannot expand geographically because they are surrounded by land that rarely comes up for sale or that is overpriced.

Mike McLaughlin, managing director of Envitec Biogas UK, said: “There’s often a lot of pride at stake between neighbouring farms.

“Sometimes almost subconsciously that can make one family unwilling to sell to another, which makes land scarce and helps push up prices.

“In my experience, this situation can lead to completely illogical commercial behaviour.”

Some family concerns agree to buy at the inflated price, Mr McLaughlin said, while others take on land miles away.

He added: “In other words, they pay over the odds for adjacent land or they increase costs by having to transport people, products and equipment all over the countryside.

“Either way, they end up producing more goods that are subject to market volatility or that are low-margin or no-margin because of supermarket buying power. It just makes no sense to me.

“I appreciate there’s an element here of ‘he would say that, wouldn’t he?’, but investment in renewable energy from AD would often represent a much better commercial decision.”

EnviTec Biogas designs, builds and services farm-scale AD units. The facility is fed with sustainable crops and slurry, and the electricity, gas and heat produced can be used on the farm and exported under the long-term and fixed Feed in Tariffs and the Renewable Heat Incentive.

The stability and predictability of income makes longer-term business planning easier, and it helps secure funding for other capital projects.

In addition, the digestate left at the end of the process is an excellent organic fertiliser – significantly reducing input costs.

It is fed with slurry from Melrose’s finisher pigs as well as maize silage and grass silage from sister company Northern Crop Driers.

Pam Dear, one of the directors at Melrose, said: “We’re looking at payback on the investment within five years.

“Drying grass to produce feed for horses is pretty energy-intensive, so we’ll be using some of the electricity for that, while some of it will go to the grid.

“The Feed in Tariffs will help with revenues, and because they’re set for the long term it helps with business planning.

“Pork prices have always fluctuated, so the more predictability we can build in the easier it is to make sensible investment decisions.”

Pam added: “The EnviTec facility means we don’t have to use the lagoon for slurry storage. It’s processed and cleaned before it ever needs to be stored and it turns the pig slurry into a product with more readily-available nutrients for uptake by the crops.

“It helps with odours, and at the end of the process you end up with a product that is better than the one that went in.

“The beauty is that biogas production will help both our businesses grow.”

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